WEBCAST PRESENTATION Q1 2019 - April 2019 - SBB
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Skeppsbron 1, Karlskrona WEBCAST PRESENTATION Q1 - 2019 April 2019
QUARTERLY HIGHLIGHTS
▪ Net profit for the quarter increased to SEK 216 million (113) despite SEK 25m non-recurring costs related to bond buy-backs and some
1 additional non-recurring costs related to transactions and energy projects.
▪ The net asset value after deductions for dividends increased strongly during the quarter by SEK 432m or SEK 0.57 per ordinary class A- and
2 B shares. This is almost double compared to the first quarter 2018.
▪ We continue to strengthen equity, during the first quarter by SEK 585m. After the end of the quarter, we issued ordinary class D shares for
SEK 750 million and a hybrid bond of EUR 300 million. This means that in 2019 so far we have strengthened equity by approximately SEK
4.4 billion to approximately SEK 15.5 billion.
3 ▪ At the end of the first quarter, our net loan-to-value ratio was 52 percent. Taking into account the issues of ordinary class D shares of
approximately SEK 750m and the issue of the hybrid euro bond of about SEK 3.2bn after the end of the quarter, as well as the DNB sale of
approximately SEK 4.9 billion, and a planned repayment of SEK 3.4 billion of secured debt and adding the announced acquisitions in
Finland, pro forma net loan-to-value ratio would be about 40 percent.
▪ We continue to deliver profit from three value creating areas - renovations/investments in our properties, building rights and transactions.
4 Investments and transactions contributed with SEK 135m and building rights with SEK 32m to profit before tax in the quarter.
▪ In the first quarter, 176 apartments were under renovation and another 75 apartment leases were terminated and in the planning stages
for renovation, to commence during the second quarter.
▪ During the first quarter, the zoning plans of 50,500 sq.m. building rights were approved in Nykvarn Kaffebryggaren 1, Oskarshamn Hälsan
5 22 and Ulricehamn Krämaren 4. We have also built two LSS-special housing buildings using our building rights in Malmö-Burlöv.
▪ Our estimated earnings capacity on a rolling 12-month basis at the end of the first quarter was SEK 798 million, an increase with 35 percent
6 from SEK 590m at the end of Q1 2018.
|2
FINANCIAL PERFORMANCE
2019 2018 2018
Q1 Q1 Jan-Dec
Rental income, SEKm 429 390 1,680
Net operating income, SEKm 240 233 1,071
Surplus ratio, % 56 60 64
Interim profit, SEKm 216 113 1,690
Yield, % 4.6 4.7 4.7
Cash flow from current operations, SEKm 97 40 248
Property value (market value), SEKm 27,201 23,816 25,243
EPRA NAV (long-term net asset value), SEKm 9,168 7,360 8,736
Earnings capacity, 12 months rolling 798 590 770
Loan-to-value ratio % 52 62 53
Equity ratio, % 39 33 41
Adjusted Equity ratio, % 43 37 44
Earnings per ordinary share, SEK 0.20 0.19 2.07
|3
COMPANY OVERVIEW
Samhällsbyggnadsbolaget i Norden AB (SBB) in brief Property value per region: 66% in regions of big Nordic cities
▪ SBB was founded in March 2016 by Ilija Batljan who previously served as deputy
CEO of Rikshem and has a long and successful background in the community
Oslo
services real estate segment, Market Value, (%) 25%
Northern Sweden & Dalarna
Market Value, (%) 14%
▪ SBB’s main strategy is to own and manage low-risk social infrastructure properties Area, sqm 82,881
Area, sqm 323,245
in the Nordics and regulated residential properties in Sweden.
▪ SBB owns approximately 10,350 regulated rental residentials (of which 1,700 Kristiansand
units are owned by JV) in Sweden, from Malmö in the south to Sundsvall in the Market Value, (%) 3% Tampere
Area, sqm 36,261 Market Value, (%) 0%
north with the majority in the regions of Stockholm, Sundsvall, Oskarshamn,
Area, sqm 10,576
Karlstad, Borlänge and Motala
Nothern Sweden
▪ The Company also run residential zoning plan processes on attractive commercial Helsinki
properties and develop residential properties as and when attractive Market Value, (%) 0%
opportunities arise on an risk adjusted basis Area, sqm 4,320
Tampere
▪ Out of SBB’s property value 71% is located in Sweden, 28% is located in Norway Dalarna Helsinki Greater Stockholm
and 1% in Finland as of 31 March 2019. Oslo Market Value, (%) 22%
▪ On 16 April 2019, Fitch announced a BBB- rating (Stable Outlook) Area, sqm 243,479
Middle Sweden
▪ On 26 April 2019, SBB received its second Investment Grade rating when S&P Stockholm
Market Value, (%) 20%
Ratings announced a BBB- rating (Stable Outlook) Kristiansand
Middle Sweden
Area, sqm 463,119
Gothenburg
▪ SBB is listed on Nasdaq First North Premier with a market value of SEK 11.5bn 1) Greater Gothenburg Greater Malmö
Market Value, (%) 4% Market Value, (%) 12%
Area, sqm 117,977 Area, sqm 184,550
Malmö
Property portfolio
Adjusted Equity
Property value # of properties Rental income2) Occupancy rate Portfolio yield4) WAULT (CSP)
ratio3)
SEK 27.2bn 644 SEK 1,714m 96.6% 4.6% 7 years 43%
All figures in this presentation are for the Group as of 31 March 2019, if not otherwise stated
1) As of 26 March 2019, based on 546,071,540 common shares of class B and a share price of SEK 12.00 and 209,977,491 non listed class A-shares at the same value, 74,306,832 class D shares at a share price of SEK 31.50 and
175,251 preference shares at a share price of SEK 636.
2) Current earnings capacity for the Group for 12 months given the real estate portfolio, financial costs, capital structure and organisation as of 31 March 2019 |4
3) Reported equity incl. shareholder loans and convertibles, with reversal of reported deferred tax liability as a percentage of total assets
LOW-RISK COMMUNITY SERVICE AND RESIDENTIAL PROPERTIES COMPLEMENTED BY
RESIDENTIAL DEVELOPMENT POTENTIAL
Social infrastructure properties Residential properties Other / building rights development
SEK 16.7bn SEK 8.5bn 7% SEK 2.0bn
62%
31%
Includes schools, elderly care, LSS-housing and Mainly constitutes of rental apartments in Commercial properties held in order to create
municipal/governmental agencies multi-tenant houses but also includes rental future residential development plans
terraced houses
▪ Nordic focus ▪ Swedish focus ▪ Identified development potential in current
▪ Publicly financed tenants ▪ Low tenant dependency and high occupancy portfolio corresponding to 934k sqm
▪ Low tenant turnover and long contracts rate ▪ Only opportunities with a high risk adjusted
▪ High demand, limited supply ▪ Value creation through renovations return is undertaken
Oslo, Gullhaug Torg 4 Västervik, Fabrikanten 10-11 Nyköping, Raspen 1,2,3
|5
LONG TERM RELIABLE PARTNER FOR MUNICIPALITIES CREATES STABLE INCOME
Income overview1) ▪ Long history of actively working with several
History of municipalities in Sweden
Classification Rental Income, SEKm % of Total acquiring from
municipalities ▪ First transaction completed only 6 months after
Residential 547 32 SBB was founded
Group Housing (LSS) 179 10 ▪ Ongoing discussions with several municipalities
for collaboration projects involving development
Government 718 42 of new community service properties
Active ownership
Indirect Government 117 7 ▪ Extensive collaboration with long term care
service provider, to meet municipal needs of
Other 153 9
service
Total 1,714 100
▪ Property development portfolio includes assets in
Property Haninge, Falkenberg, Falun, Nyköping, Nykvarn,
Properties acquired from municipalities Municipality and state tenants development Höganäs, Motala, Uppsala, Karlstad, Kävlinge,
Luleå and Ulricehamn
▪ Borlänge: Acquisition of residential and
community service properties, for example the
SEK ~760m SEK ~400m City Hall
▪ Haninge: Acquisition of Jordbro Centrum and
Västerhaninge Centrum and upcoming building
SEK ~300m The transactions rights for approx. 1,500 apartments
SEK ~350m
▪ Huddinge: Nine school and community service
properties acquired from the municipality of
SEK ~70m Huddinge in Stockholm County
SEK ~1,050m
▪ Skellefteå: Signed SPA to acquire the new
community center
1) Current earnings capacity for the Group for 12 months given the real estate portfolio, financial costs, capital structure and organisation as of 31 March 2019
|6
UNDERLYING MEGATRENDS SUPPORT CONTINUED GROWTH
Demographic change
Sustainability and
energy efficiency
Urbanization
|7STRONG NET OPERATING INCOME IN Q1
▪ Profit after tax was SEK 216m, which adjusted for non-recurring costs relating to refinancing and the repurchase of bonds, amounted to SEK
1 241 million, a strong increase compared to the corresponding quarter of the previous year.
▪ Our strong net operating income combined with long-term reduced financing costs and cash flow from building rights enable continued
2 strong cash flow (see the table below).
▪ Our estimated earnings capacity using rolling 12 months at the end of the first quarter was SEK 798 million, corresponding to an increase of
3 35 percent from SEK 590 million at the end of the first quarter of 2018.
SEKm
Cash flow from operations before changes in working
97
capital
Refinancing costs 25
Cash flow from sold building rights 157
Paid interest on hybrid bonds and paid dividend on
-41
preference shares
Adjusted free cash flow 238
|8EARNINGS CAPACITY PROPERTY PORTFOLIO AS OF 31 MARCH 2019
Current earnings capability for the Group for 12 months
SEKm Surplus ratio: 69%
1 600
530
1 400
28
1 200 63
74
1 000 404
1 714
800
600 1 184
400 798
200
0
Rental income Property costs NOI Central Profit from JV Financial Financial Operation
administration income expenses profit
|9IMPROVED MARKET ACCESS & REDUCED COST OF FUNDING
NEW ISSUE SPREADS HAVE DECREASED SIGNIFICANTLY FOR SBB
3m + STIBOR
(in bps)
650
600
550
500 S&P BB rating
S&P announces BB affirmed (Stable
rating outlook) Fitch ratings BB+
S&P BB rating
450 (Stable outlook)
affirmed (Positive (Rating Watch
outlook) Positive)
400 S&P BB rating
(CreditWatch
positive)
350
300 Fitch BBB- - 534 bps Δ - 268 bps Δ - 190 bps
Fitch announces BB rating affirmed
rating (Positive (Stable outlook)
250 outlook) S&P BBB-
rating affirmed
(Stable outlook)
200
198 Bps
172 Bps Maturity
150 Maturity 10/03/2022
114 Bps 01/29/2021
100 Maturity
04/06/2020
50
2017-04-29
2017-06-08
2017-07-18
2017-08-27
2017-10-06
2017-11-15
2017-12-25
2018-02-03
2018-03-15
2018-04-24
2018-06-03
2018-07-13
2018-08-22
2018-10-01
2018-11-10
2018-12-20
2019-01-29
2019-03-10
2019-04-19
2019-05-29
2019-07-08
2019-08-17
2019-09-26
2019-11-05
2019-12-15
2020-01-24
2020-03-04
2020-04-13
2020-05-23
2020-07-02
2020-08-11
2020-09-20
2020-10-30
2020-12-09
2021-01-18
2021-02-27
2021-04-08
2021-05-18
2021-06-27
2021-08-06
2021-09-15
2021-10-25
2021-12-04
2022-01-13
2022-02-22
2022-04-03
2022-05-13
2022-06-22
2022-08-01
2022-09-10
Spread (Bid) 10/03/2022 Spread (Bid) 01/29/2021 Spread (Bid) 04/06/2020
Issue date 09/26/2018 Issue date 01/22/2018 Issue date 03/29/2017
Source: Bloomberg as of 26 April 2019.
| 10PROJECT DEVELOPMENT POTENTIAL
Current development portfolio (31 March 2019) Example projects
Municipality Property Building right, sqm Västerhaninge (Haninge) Zoning plan process
Development projects with formal planning process initiated
Västerhaninge centrum, Haninge
Nyköping Raspen 1,2,3 156,000
The area is located right by
Haninge Kalvsvik 11:9, 1:4 m.fl 135,000
Västerhaninge station, a station for
Haninge Åby 1:67 m.fl. 110,000 the Stockholm commuter train. The
Falun Falun 9:22 100,000 entire community centre is to be
Falun Högbo 1:22 28,020 demolished to enable a new
residential area of 110,000 sqm GLA
Norrköping Järven 4 21,800
with a mixture of shops and other
Motala Tellus 1 20,000 services at street level.
Bollnäs Bro 4:4 m.fl. 15,000
Karlstad Letten 1 12,000
Borlänge Klövervallen 1 m.fl. 12,100 Raspen 1, 2 & 3 (Nyköping) Zoning plan process
Sundsvall Härsta 9:3 m.fl. 10,000
Stockholm Kadetten 29 10,000
Nöthagen, Nyköping
Karlshamn Lasarettet 8 6,500 An urban development project of an
Lund Landsdomaren 7 5,500 existing industrial area in a very
Falköping Trollet 14 4,250 central location in Nyköping, right
next to the new station for the high-
Karlskrona Gullbernahult 1 3,500
speed railway Ostlänken. The
Total 649,670 project will enable the development
Projects in earlier development phases 146,580 of 156,000 sqm GLA residential
property mixed and community
Projects with planning permission 160,640 service properties.
Total portfolio 956,890
Of which are sold 428,650
Total value, sold building rights SEK 1,522m SBB never buys or owns raw land, but develops building rights from
▪ SBB had per 2019-03-31 ongoing development projects with a total of 960,000 sqm GFA. The table properties that are already cash flow generating and thus takes on
above contains information regarding SBB’s current planning projects along with estimated volumes minimal or no capex risk
| 11IN SUMMARY
1 ▪ Sustainable and predictable cash flow remains the foundation of our activities.
▪ Experienced development and transaction teams with strong track records.
2
▪ Strong NAV growth thanks to three value creating areas – renovations/investments in our properties, building rights and transactions.
▪ Profit before tax amounted to SEK 349m, where the profit from property management contributed with SEK 106m, investments and
3 transactions with SEK 135m and building rights with SEK 32m. Between 2016 and 2018 transactions contributed with SEK 700m, building
rights with SEK 511m and investments with SEK 290m on average per year.
▪ Significant potential from renovations within both residentials and social infrastructure properties.
▪ In the first quarter, 176 apartments were under renovation and another 75 apartment leases were terminated and in the planning stages
4 for renovation, to commence during the second quarter. 600 residential units to be renovated in 2019.
▪ Renovation within social infrastructure – New 25-year agreement with Nykvarn’s municipality in connection with the rebuilding of the
municipal house
▪ Sustainability is a central part of our business model and we have initiated major investments in reducing carbon dioxide emissions by at
least 400 tonnes per year over the next five years.
▪ Energy projects are underway in the properties Stensiken 1 in Tidaholm and Yggdrasil 1 & 2 in Skara, and these are expected to be
5 completed in June 2019. On the Tellus 1 property in Motala, the goal is to reduce the amount of purchased energy by 50 percent and CO2
emissions with 75%.
▪ In early February, Samhällsbyggnadsbolaget issued its first green bond of SEK 500m with a maturity of five years. During the quarter, the
green bond was also listed on Nasdaq Sustainable Bond List.
▪ We see continued strong demand for rent regulated rental apartments and great competition for both rental apartments and community
service properties.
6 ▪ Last quarter I wrote: “look forward to the credit rating agencies' reports.” Now we have delivered: BBB- (stable outlook) rating from both
Fitch and Standard & Poor’s. Our short-term goal is BBB.
| 12THANK YOU!
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